How to master enterprise risk management once and for all

Our world is getting more complex by the day.

A product recall, natural disaster, lawsuit, or new government regulation could bring your organization to its knees. For a small business, that’s a big deal. That’s someone’s livelihood, along with potentially dozens of employees.

For enterprise businesses, the stakes are even larger. Potential risks can cost 100s or 1,000s of jobs, create supply issues for consumers, and even affect the economy.

In this article, we’ll define risk management, explain how crucial it is to enterprise businesses especially, and show you how monday.com can keep you 2 steps ahead of significant risks.

What is enterprise risk management?

In technical terms, enterprise risk management (ERM) identifies, monitors, and plans for potential risk events that might prevent an organization from reaching strategic objectives.

In plain terms, enterprise risk management makes it easy to see problems before they happen and make a plan to prevent them or at least lessen the damage when they do.

Without it, you’re fighting blind with little to no way of forecasting potential obstacles that may or may not have a major impact on your daily operations.

Creating a foolproof enterprise risk management plan consists of identifying, assessing, and planning for potential risk events or compliance issues. It also involves taking action where necessary and monitoring those risks short-term and long-term.

Creating a foolproof risk management plan means deciding when to choose risk responses like accepting risk, avoiding risk, terminating risk, sharing risk, or mitigating risk. Each one has its own uses and is appropriate in certain circumstances.

Why is risk management important?

Enterprise risk management matters because, without it, you’re vulnerable as an organization. Some key benefits of risk management include:

• Increased operational efficiency and effectiveness, which means you can do more with less.
• Tighter legal, reporting, and regulatory compliance, which means fewer operational costs, lawsuits, or fines.
• Greater confidence in reaching strategic objectives, which means greater profit or market share.
• Improved awareness of potential risks, which enhances the organization’s ability to respond appropriately.

A sound risk management process creates the mechanism that promotes risk identification, risk awareness, and risk monitoring. The benefits far outweigh the costs, and software solutions to risk management like monday.com make it easy to keep up with all of it.

But how do risks at the enterprise level compare to others?

Enterprise risk management is especially important because of the gap between executives and senior leaders and their frontline employees.

The common element here is that people at the top believe everything looks great. Their high-level metrics look good, and the reports they get from junior leaders will often say what they want to hear.

Yet, when you talk with frontline employees, you’ll find there are more problems than meets the eye.

There’s an invisible layer that’s preventing the information from rising to the appropriate level. That’s where enterprise risk management saves the day.

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How to manage risk at the enterprise level

Enterprise risk management is the answer to the question, “what are the major risks that could stop us from achieving our strategic goals?” It’s about ensuring the people at the top can filter through the noise, get the information they need, and make more informed decisions.

But what does that actually look like day-to-day?

Enterprise risk management starts with senior management providing the guidance, support, tools, knowledge, and resources needed to begin identifying potential risk items.

Without all that, any effort to mitigate risks or remain compliant will likely fizzle out over time or completely fall flat. At the enterprise level, there’s an overarching strategy, but each individual department or division will have its own competing strategy they’re pushing.

If there’s any misunderstanding or lack of communication between these major players at the enterprise level, then you leave yourself open to potential risk.

The best way to get ahead of all that is by deploying an enterprise risk management system.

If each sector of the business uses the same system, then it’s possible to combat risk at the enterprise level. monday.com is such a solution, but the software is only as good as the process you embed into it.

How to implement your own enterprise risk management process

The enterprise risk management strategy you deploy comes down to the individual processes and systems you create. Ideally, you have one with automation and plenty of checks and balances.

Here are the key steps to implementing one:

Capture potential risk items right away

Truly managing risk starts and ends with a good risk assessment. It’s not something you do once, but constantly.

The landscape is constantly changing as new technologies emerge, new laws come into play, and the economy fluctuates.

Before you begin, you’ll need to find a way to log these risk items. Here’s where setting up a risk register in monday.com comes in handy.

The image above shows a risk register in action with each individual risk on its own line, followed by key information that’ll help you properly manage said risk.

What are the different types of risk, you ask? It’ll vary by industry, but common risk domains include:

• Operational risk such as failed internal processes and systems.
• Strategic risks like potential acquisitions or mergers.
• Financial risks from costs related to litigation, insurance payouts, or foreign exchange rate changes.
• Human capital risks such as turnover, burnout, or strikes.
• Technological risks like data breaches or data loss.
• Hazards like natural disasters.

The potential for risk is everywhere and is constantly changing. Only through proper logging and tracking do you have a chance of keeping up.

Take compliance risks seriously

Enterprise risk management also includes compliance risks. You never know when regulatory committees will crackdown on existing laws and regulations.

The potential for the government to pass new laws that might disrupt your operations is always a possibility as well.

The only way to ensure you’re 2 steps ahead is by appointing the right people to the task. For starters, every major enterprise should have a Chief Risk Officer (CRO).

A CRO is a C-suite executive that ensures the enterprise remains compliant with regulatory requirements set forth by the government.

They’re the ones senior management reports potential risks to and who is ultimately responsible for the success or failure of your risk management process.

A CRO can’t do everything, though. You’re also going to need to appoint various compliance officers — ideally, people with a working knowledge of your industry but who also understand compliance laws and regulations.

Maximize data security

At the enterprise level, there’s a strong chance your company is collecting, storing, and managing data related to payments, intellectual property, or even sensitive personal information about your costumes and employees.

All of that is like a goldmine to hackers and can end up hurting your company’s financial position and reputation.

Data security means protecting sensitive and valuable information from unauthorized sources. In September 2020 alone, 9.7 million healthcare records were compromised from hacking incidents.

A simple way to maximize data security is by picking a Work OS that prioritizes cybersecurity like monday.com.

Leverage the power of SSO, 2FA, and IP restrictions to ensure only authorized people gain access to your technology framework.

Begin risk planning and assigning ownership

Once your enterprise risk register is full of risk data, it’s time to assign risk ownership and specific plans for each risk item.

monday.com will help ensure each item matches your risk appetite by flagging a risk status, probability, and category. More importantly, it’ll keep your risk culture strong by allowing you to assign a risk owner to each risk item.

Prioritize risk monitoring

If you prioritize data security, risk capture, and risk ownership, then the clear next step is to take all your planning and put it to good use. Effective risk mitigation comes down to proper risk monitoring.

monday.com aids in this process by not only providing the right risk management boards but also enabling the creation of risk dashboards that combine your various risk and compliance management boards.

This enables you to see key risks and the key risk indicator metrics at a glance in real-time.

You can also set up automations in monday.com that’ll notify your CRO, board, or key compliance officers by email when a high-impact risk gets a probability status upgrade.

With timely communications like that, your risk management team can leap into action and put the right resources behind either mitigation or prevention.

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Enterprise risk management best practices

Your risk appetite will vary widely depending on a lot of factors. What shouldn’t change is following enterprise risk management best practices at all times. Unnecessary risks are no good to anyone.

Here are a few best practices that’ll help ensure you’re on top of enterprise risk at all times:

Actions to take

• Get buy-in from senior leaders, executives, and the board.
• Leverage existing documentation, resources, and skills to start.
• Build your risk register and corresponding planning incrementally.
• Ensure all employees know their role in the risk management process.
• Take a holistic approach to risk management across the entire enterprise.

Actions to avoid

• Avoid getting bogged down by historical risk and remain future-oriented.
• Focus less on categorizing risks and more on risk avoidance and mitigation planning.
• Don’t focus your efforts on individual parts of the business. Your approach should be all-encompassing.
• Don’t treat ERM as a project — it’s an ongoing process because your risk register is never full or complete.
• Avoid resting the fate of your company’s risk on the shoulders of a handful of people. Everyone is a risk officer and has a role to play.

Finally, don’t be afraid to take calculated risks when it makes sense. Some risks are definitely worth taking, especially when you’ve done your homework in advance.

Other features of monday.com that will boost your efficiency

monday.com isn’t just an enterprise risk solution. It’s a Work OS that will transform every area of your budding enterprise.

It’s trusted by companies like Adobe, Coca-Cola, NBC, Hulu, and 125,00 more companies.

monday.com makes enterprise risk management feel easy, but that’s far from all it can do. Some other features we’re sure you’ll love include:

• Advanced board filtering that lets you sort your risk register by priority, likelihood, risk manager, key dates, and more.
• Integrated task checklists are critical for ensuring all compliance tasks get completed on time and with as little human error as possible.
• Secure document storage built-in, so you always have risk mitigation docs, compliance charts, and more at your fingertips anytime, anywhere.
• Robust internal collaboration and communication tools that keep all personnel in the know regarding potential risk items or compliance issues.

The list of features is endless, and so are the possibilities monday.com offers your organization.

Gaining confidence in your risk management

The difference between successful and unsuccessful companies is the flow of information.

Successful companies facilitate the free flow of information from top to bottom, bottom to top, and across all areas of the business.

monday.com provides the flow you need to mitigate and eliminate risk and communicate more effectively as an organization.

Your enterprise risk strategy is unique, which requires a flexible solution. monday.com is the premier enterprise risk management solution because it’s fully customizable.

You can take a strict approach with your processes or design a flow that optimizes for your unique risk appetite. What more could you ask for?

If you’re ready to seize control of enterprise risk management once and for all, then check out our Risk Register template. You can plan for the future in a matter of minutes.

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